5-Unit Apartment Building For Sale In Utica, NY w/ Great "Cash-on-Cash" Return
I am currently looking to sell my 5-unit apartment building located in Utica, NY. Below is some preliminary information regarding the current state of the property. If you are interested in knowing more, I would be happy to provide any and all pertinent documents/pictures to allow for any due diligence if we get to that point:
It is currently 80% full and I am currently marketing to get the 5th unit occupied (I anticipate full occupancy before the end of March). As it stands, it is producing a gross rental income of $3000/month, and with the 5th unit occupied at a $650 monthly rent, it will be generating $3650/month. Full year leases (with escalating annual rent increase schedules) are in place for each respective current tenancy. The neighborhood class would be between a B and C and yields a cap rate around the 10% mark. The net operating income for this property is currently about $20,760, but with the 5th unit occupied, the NOI will jump to $28,560.
Approximate expenses are as follows:
Gas/Heat/Electric: High-end will be around $450 through heating season; this amount will drop during the warmer months due to the heat being shut down, so the gas expense will predominantly be for appliance use and hot water. The way it is currently set up, there are two boilers heating 2 units; electric panels heating 1 unit; and a furnace heating the remaining 2 units. With the exception of one of the boiler-heated apartments and the electric baseboard heated apartment, the thermostats are not accessible by the tenants, so the heat usage is regulated. Starting Sept 1st and January 2016 (new leases), respectively, the electric baseboard heat tenant and the boiler heat tenants will begin paying for their electricity usage, thus, making all 5 units completely separate electric. Additionally, I plan on/recommend putting a lock box on the thermostat in the boiler heat unit to make it a heat-regulated apartment like the others. So with all these changes, the "Heat/Gas/Electric" expense will drop significantly.
Water: $123.89/month
Insurance: $125.00/moth
Annual Taxes: $308.33/month
Property Management (8% GRI at full occupancy): $292.00/month
CapEx: I've spent almost $5000.00 on separating/updating the electrical systems; I will be spending between $5000-$7000 for putting a new roof on [[shingles on the pitched part of the roof and resealing the flat part of the roof]] as soon as the weather permits; it has all replacement windows; 3 hot water tanks and 2 boilers that are all in great working order; aluminum siding that is in good condition; and a full parking lot that is in exceptional condition. So with all this work done, I have my current monthly CapEx monthly expense to be $50.00.
Grounds Care/Maintenance: $83.33/month
Vacancy (5% GRI at full occupancy): $182.50
This brings the high-end monthly expense total to $1615.05, but it should be a few hundred dollars lower by the beginning of next year, especially with the built-in escalated payment schedule in each lease, so I would conservatively estimate something closer to $1400/month.
So based upon these numbers, at a 10% cap rate, the property is valuated around $225,600.00. With 20% down at this price, after expenses and debt service, the property should yield about $1044.17 ($208.83/door) per month, giving you a 27.77% annual "cash-on-cash" return.
Tenant profiles are as follows:
"Apt A" is 2-bed/1 bath occupied by a couple that has been there for about 5 years. They just signed a new lease at the beginning of the year.
"Apt B" is a 2-bed/1bath occupied by a couple that has just moved in.
"Apt C is a 1-bed/1-bath that is currently unoccupied.
"Apt D" is a 2-bed/1bath that is currently occupied by a single tenant, whom just signed a new 6-month lease March 1st, 2015. This was done to stagger the leases, in which I plan on re-implementing a 12-month lease term upon the next lease signing in September.
"Apt E" is a split level 2-bed/2-bath with an attached garage. This couple moved in last month and are currently signed to a 13-month lease.
I welcome and encourage questions, so please feel free to contact me if you are interested in learning more about this property. Thank you.
Asking Price: $219,000.00